Shares of Fisher & Paykel Healthcare, which has lifted its full-year guidance three times, rose to a two-year high after brokerage First NZ Capital raised its rating to "outperform" from "neutral", citing prospects for better growth and higher margins.

F&P Healthcare shares rose as high as $3.05, the highest level since May 23, 2011, when it touched $3.10. It was recently at $3, having gained 26 per cent in the past 12 months.

That comes after First NZ Capital analyst Sarndra Urlich raised her 12-month price target for the stock to $3.30 from $2.50 in a report yesterday

F&P Healthcare, which makes breathing masks and respirators, is expected this week to say full-year profit rose 17 per cent to $75 million as demand for new masks boosts sales and margins widen. The company, which has expanded margins through new products, increasing productivity and shifting some manufacturing to Mexico, is trading at a discount to its key rival ResMed, First NZ said.

"The business has done a great job in the last few years of getting its cost structure right and continuing to reinvest," said Shane Solly, who helps manage more than $200 million at Mint Asset Management and is a long term holder of the stock. "Now we are starting to see the benefit of that investment. That has been a little bit missed by some investors. It's been a stock that's languished for some time."

Auckland-based F&P Healthcare is scheduled to report its profit for the year ended March 31 about 9am Thursday. Expectations range from $73.9 million-to-$75.3 million with a mean of $74.7 million, according to a survey of seven analysts by Merlin Consulting.

Profit expectations are in line with the company's guidance in February of about $75 million. That was up from its previous expectation in November of $69 million-to-$72 million, the $65 million-to-$69 million estimate in August, and its May guidance of $62 million-to-$70 million.

First NZ expects the company to provide "robust guidance" for 2014 profit. Analysts expect profit of $79 million-to-$83 million with a mean of $81 million, according to Merlin.

Sales of masks to treat obstructive sleep apnea had been lagging in recent years, however the company's new Eson nasal and Pilairo nasal pillow masks and the higher-margin Simplus full face mask are expected to boost sales for sleep apnea devices in 2014, First NZ said.

Strong revenue growth is expected to continue in 2014 for the company's higher-yielding consumables and humidifier controllers, First NZ says.

F&P Healthcare, which gets more than 50 per cent of its revenue in US dollars, has boosted profits even as the New Zealand currency rose against the greenback.

"It's one of the few businesses in New Zealand that have really been able to make headway when the currency is massively against them," Solly said. "They are getting on with it."

The company, which hedges its overseas sales to protect against from currency movements, stands to gain from the New Zealand dollar's recent falls. The kiwi, which soared above 86 US cents in April, recently traded at 81.41 cents.

Sales of the company's respiratory devices for hospitals and its masks to treat the condition obstructive sleep apnea, often a result of obesity, tend to be in demand regardless of economic growth, Solly said.